FG urged to tackle forex challenges in petroleum downstream

The need for the Federal Government to be proactive in the provision of foreign exchange (forex) to petroleum marketers has been emphasised.

Former Executive Secretary of the Petroleum Products Pricing Regulatory Agency (PPPRA), Reginald Stanley, while speaking at the commissioning of a mega petrol station built by Emadeb Energy Services Limited in Abuja, commended the federal government for its intervention in the downstream petroleum sector, describing it as good and enormous.

He said that it is imperative that government cleared certain administrative bottlenecks, which are preventing the liberalisation of the sector in providing forex to marketers.

According to him, when forex approved for marketers are delayed from getting to their banks to enable them open letters of credit for orders placed, the volatility associated with petrol importation will eventually affect the tonnage imported by marketers.

Stanley pointed out that the forex challenges are national, “whether you are manufacturing or importing, but the government has done very well by providing intervention forex for the downstream to make sure that it keeps running.

“The only little lacuna here is that the forex needs to be made to work. There is a little bit of administrative bottleneck here and there that needs to be untangled; and, as soon as you do that, it will work well. The intervention is great but the application has to be fine-tuned.

“The way the forex is being given today, there is a timing issue. If you are given forex on a Monday and the price of Premium Motor Spirit (PMS) is $450 per tonne, but that forex does not get into your account for letters of credit to be opened until Friday, it means there is a time difference of four days, and unfortunately, there is volatility in the market place because by Friday the price would have moved up to $500 and marketers will bring less quantity. That underpins why a good number of marketers are unable to import petrol.”

Stanley pointed out that opportunities in the nation’s downstream sector have continued to grow, with the positive consequences of upgraded investments, including mega, multifunctional service stations like Emadeb retail outlet.

He described the filling station as mega station, “which is what I have always advocated. This is an integral part of the downstream development in Nigeria. We have had a proliferation of filling stations littered all over the place but abandoned.

“Mega filling stations are the roadmap to the future. For Emadeb Energy Services Limited, this is a very good move that comes at a very critical time when depots are gone and products are taken to the consumers with efficiency.”

He said, “as it were operators would now have to be efficient in order to survive the competition in the business,” pointing out that the decision by the federal government to liberalise and peg pump prices within the N135 and N145 bracket has, no doubt, stimulated competition.

Speaking on the new outlet, the Managing Director of Emadeb Energy Services Limited, Adebowale Olujimi, said his firm was already building 10 of such new outlets across the country, with further plans to acquire some existing stations within the next 18 to 24 months.

He said the decision by the petroleum products haulage and petroleum products distribution company to venture into ownership of retail outlets was informed by the need to expand operations and increase earnings, stressing that “this essentially stemmed from our growth strategy and the commitment to taking our business to the next level, following the commissioning of our ultra modern Tank Farm in February 2014.”